Good morning,
DXZ9 97.690 -0.124 GCZ9 1470.0 -4.2 ESZ9 3112.25 +3.25 CLF0 57.37 +0.36
Headline at 7:07 AM CST: US may delay Dec 15 tariffs if pact is not reached by then. This probably trumps (no pun intended) many things written below, but here it is anyhow.
Yesterday’s headline that phase 1 of the trade deal may not get done this year rattled the markets, knocking equities back and hitting commodity prices. Gold managed a bid off of that. Overnight, equities took another shot across the bow, as President Trump was to sign the bill supporting the Hong Kong protestors, keeping the trade negotiation tensions with China in place. However, equities recovered later in the evening, as a Chinese trade official came out saying he was still cautiously optimistic that a deal could get done this year.
Oil prices continue to whip around, continuing to bounce off the lows put in on Tuesday, in front of expectations of a large crude build in the US. Data released yesterday showed a small build to crude stocks, much less than what was projected from the API report the previous afternoon. Oil prices, which were already trading higher off of a headline from Russia saying it was willing to work with OPEC on production quotas, despite minor disagreements. Production quotas for 2020 are expected to be a focal point of the next round of OPEC+ meetings on Dec 5-6.
The trade news certainly brought a big hammer to numerous commodity markets yesterday. Hogs were limit down at one point, cotton prices were hit hard as well. Grain prices, soybeans and meal in particular, also rotated lower on the thoughts of potential lower or delayed trade with China. In the case of the grains, there are some weather systems that are thought to possibly create even more delays to the completion of harvest, which may have mitigated some of the “trade deal” selling.
Some other commodity markets had moved higher, as trade deal concerns didn’t have much of an impact on them. Coffee had a large up day yesterday. Prices had been driven down the past few sessions, as the December contract approached first notice day. With FND, in the rearview mirror, and very few deliveries reported on the first day (much less than expected), prices managed to recover. The overall low price kept producers away from making sales, and as prices kept moving up, taking out key resistance levels, technical factors got involved and prices kept grinding up. Wheat prices also traded higher yesterday. There really wasn’t any major piece of bullish news, but the weather systems moving across the Plains are thought to miss some of the areas that could use some coverage. One thing to note, regarding year end index rebalancing, with the large move down in Kansas City wheat this year, there could be some additional buying of the KC wheat on the rebalance. This may draw some additional buying into the Chicago wheat as well.
Technical Moving Averages:
Product 50 day 100 day 200 day
SF0 926.00 912.00 918.00
CH0 392.25 402.50 409.75
WH0 508.75 505.00 509.50
KWH0 428.75 438.00 467.25
MWH0 543.50 542.00 561.00
SMF0 305.3 305.9 312.2
BOF0 30.54 29.75 29.72
CLF0 55.46 55.52 57.27
GCZ9 1495.9 1487.7 1409.1
LHG0 74.575 73.965 76.020
LCG0 119.185 116.375 117.730
KCH0 104.30 105.35 106.50
CCH0 2500 2432 2401
CTH0 63.95 63.08 67.87
SBH0 12.46 12.60 13.15
JOF0 101.25 103.50 111.05
HGZ9 263.05 263.40 273.20
Thanks,
Mike
Michael Clifford
141 W Jackson Boulevard
Ste 1065
Chicago, IL 60604
Trean Group, LLC
312-604-6404